Business Plan: What it Is, How to Write One

If you’re starting a business, you know that a business plan is essential. But what is a business plan and how to write one?

A business plan is a roadmap to your business’s success. It outlines the goals and challenges you expect to face, the strategies you’ll use to meet your goals, and the funding you’ll need to make it all happen.

In this article, we’ll walk you through the business planning process and teach you how to write a business plan that will help you start, grow, and succeed in your industry. 

What is a business plan?

A business plan is a comprehensive document that outlines what your business is and where it's headed. It's a go-to guide that outlines your business's goals and details how you plan to achieve those goals.

Business plans are also used to attract potential investors to your business. If you're seeking funding, a business plan is a must. Investors want to see that you have a clear plan in place and that you have thought through all aspects of your business. 

What is the purpose of a business plan?

There are many reasons why you need a business plan, although these reasons may differ depending on your goals. For example, if you’re seeking outside funding, you’re going to need a business plan to demonstrate your ability to build a successful business. Similarly, if you’re going to be working with business partners, you’ll need a business plan to communicate your plan and your vision.

Even if you’re not seeking outside funding, a business plan can help you clarify what you hope to accomplish and help you determine if your plans are realistic or if there are holes in your strategies. A business plan can also help you make sure that you’re ready to launch your business, or take it to the next level, by forcing you to think through every aspect of your business. 

What are the key components of a business plan?
 

The components of a business plan can be a bit of a mystery. A good business plan will include many of the following sections, but you can skip some of these if you don’t need them. For example, if you don’t need to raise money, you can leave out the funding request section.

Here are the key components that should be included in your business plan:

1. Executive summary

2. Business description

3. Market analysis

4. Organization and management

5. Service or product line

6. Marketing and sales

7. Funding request

8. Financial projections

9. Appendix
 

1. Executive Summary

The executive summary is a high-level overview of the rest of your business plan. It should be about a page long and should touch on the highlights of the business. It should also include the company's mission statement.

The trick with the executive summary is to be concise. You want to hit on the main points and not bog down the reader with too much detail. Think of it as an elevator pitch. 

2. Company Description

The company description is a high-level look at the different elements of your business. This is where you will describe the problem that you’re solving, your solution, the target market, and the founding team.

The company description only allows you to provide basic details about your business. 

3. Market Research

This is one of the most important sections of your business plan. Here, you’ll provide an overview of your industry and the current state of the market. This is where you’ll include your competitive analysis and discuss your target market and how you plan on reaching them.

You’ll also need to identify your target market, which is the group of customers that you’ll be focusing on. This is important because it helps you to determine the best way to reach potential customers and how to price your products or services. 

4. Description of Organization and Management

This section should answer the question: Who is in charge? Keep it brief, but make sure to include information on the business owners and the management team. Not all businesses have partners, but if they do, a partnership needs to be addressed.

If you have multiple owners, you’ll need to list them. If you’re a single owner of a business, you don’t need this section, but you should have a section here that details what you will pay yourself and what your job will entail.

What will you and your team do? What are their backgrounds and qualifications? What is their relevant experience? What is your organizational structure? 

5. Marketing and Sales Management

This section should include how you plan to market and sell your products or services, along with information on your target market and competition. You should also include information on how you plan to build customer loyalty, and how you will manage your sales.

If you are looking for funding, you should include a detailed marketing plan that outlines how you plan to reach your target market and how you will convince them to buy your products or services. 

6. Product or Service Line

Now that you’ve done the research, you can get into the nitty-gritty of your business. Here’s where you have the chance to give a summary of what you’re selling.

If you are a new business, you may not have a lot of information on your product or service. In this case, focus on the problem you solve and how you solve it.

If you are expanding an existing business, you may have a lot more information to put into this section.

Common information to include:

• What do you sell?

• What is your pricing model?

• What is your sales process?

• What is your go-to-market strategy? 

7. Funding Request

If you are using your business plan to request funding, then this is where you will outline your funding requirements. You will need to detail how much money you need, what you are going to use the money for, and how you are going to pay it back. 

8. Financial Projections

This is one of the most important sections of your business plan. Here you will need to include a projected income statement, cash flow statement, and balance sheet. It's also important to provide a sales forecast, which is typically a month-to-month projection.

These projections will help potential investors see the growth potential for your business and make sure you can pay back any loans. You'll also want to include a breakeven analysis, which shows when your business will be able to turn a profit. 

9. Appendix

The Appendix is an optional section of a business plan that includes any additional information that may be helpful to a potential investor. This includes things like financial statements, credit history, letters of reference, and any other relevant information.

The Appendix is where you can include any other documents that you think are important for the reader to see, but that don’t fit neatly into any of the other sections of the business plan. 

How do you write a business plan?

Start with an executive summary. Begin your business plan with a brief, one- to two-page executive summary that provides a general overview of your business, its objectives and how you plans to achieve those objectives. You should also provide some information about your industry and the target markets you plan to pursue. It's important to keep your executive summary short and to the point. 

Conclusion

Writing a business plan may seem like a tedious task right now, but I promise it will keep you organized, focused, and on the path to success. Plus, it will help you secure funding and investors if you need it.